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Even though many manufacturers of entry-level computers are tremendously interested in building low-cost systems based on Intel Atom processors, the world’s largest maker of x86 chips does no see Intel Atom replacing Intel Celeron central processing units (CPUs) any time soon.

“At this point in time, we do not see [Intel Atom] replacing Celeron,” said Paul Otellini, chief executive officer of Intel Corp.

According to the head of the Santa Clara, California-based chipmaker, Intel Atom processors are the chips for entirely new product category – low-cost netbooks and nettops.

“If you look at the products that are being built, the netbook products that are being built around Atom, they are all lower priced, lower features, smaller screen sized notebooks aimed at first-time buyers or the second, third or fourth machine in a household. I don’t see it cannibalizing, at least in terms of current sales out, and I think we really have hit on a new product category here,” Mr. Otellini explaimed.

Historically Intel Celeron powered entry-level and low-performance mainstream systems aimed at customers without many requirements or with tangible budget constraints, whereas Intel Pentium processors were inside mainstream and high-end systems. But when Intel rolled out its Core 2 chips in 2006, it re-aimed Pentium at the traditional market niches of Celeron, whereas Celeron prices were lowered towards $34 - $53 level. At present certain Intel Atom chips for netbooks and nettops cost similar amount of money as Intel Celeron CPUs.

“We’re still sorting out the brand activity in our mainstream notebooks. It is clearly Centrino and Core is where the thrust is going to be, and we’re trying to… We will sort out and ultimately talk about where Pentium-based notebooks and Celeron-based notebooks live as these categories sort themselves out. But I think it’s premature to say [anything], except that we don’t see any cannibalization,” Mr. Otellini added.

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